IT products and services supplier Pinnacle Technology Holdings has reaped the benefits of cutting costs and a focus on more profitable businesses.
The group increased operating income by 21% before depreciation and tax in the six months to 31 December 2001, while net profit after tax rose 98%.
<B>Salient figures</B>
Pinnacle Technology Holdings results for the six months to 31 December 2001
Year-earlier figures in parentheses:
Revenue: R143.83m (R156.74m)
Operating income before depreciation: R6.32m (R5.22m)
Net profit before tax: R3.23m (R1.77m)
Net profit after tax: R2.15m (R1.09m)
Attributable earnings: R2.12m (R1.06m)
HEPS: 1.43c (0.72c)
Current assets: R97.6m (R114.73m)
Current liabilities: R66.96m (R79.67m)
NAV per share: 44.46c (43.43c)
Cash inflow from operating activities: -R1.07m (R2.89m)
"The cost savings actions announced at the previous publication clearly had their effect during the last six months," the company says.
Revenue for the period decreased by 8.24%, which Pinnacle says is due to a decision to concentrate on more profitable business.
"Part of this decision was to scale down on the retail business and to increase the presence in the corporate and government sectors.
"This proved to be valuable business for the group and the potential certainly exists to improve our presence in these market segments."
During the period Pinnacle acquired 35% of Explix Technologies, which took over the activities of Workgroup, formerly a subsidiary of liquidated Siltek.
"With the full management team intact, the board believes that the investment in Explix Technology will ensure that we will be the leading player in the software distribution market."
The group has lent R2.3 million to Quandry, which resulted in an investment income of R439 956 during the six months. In terms of the acquisition agreement with Explix, Pinnacle has so far lent Explix R2.1 million, which carries interest of 10% a year.
Pinnacle opened branches in Bloemfontein and Nelspruit during the six months, and it is in talks to open another two branches - in Namibia and Botswana - during the second half of the financial year.
"With the acquisitions made during the first half of the year and revised marketing strategy implemented, the group is set to perform satisfactorily," it says.
"The longer-term vision of the group is to become the IT product and service supplier of choice to the government, corporate and SMME [small, medium- and micro-enterprise] market through our various subsidiary companies both in SA and beyond our borders."
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